Zambia’s new President Hakainde Hichilema expressed hope on Thursday that talks with the IMF and World Bank this month had restored the country’s credibility with borrowers, as it seeks to renegotiate billions of dollars of unsustainable debt.
Addressing journalists in the capital Lusaka, Hichilema said the southern African country would seek to slash spending, especially on the cost of running the government, to show creditors it was serious about getting on top of its debt.
“Part of our mission was to engage the IMF and World bank so we can restore credibility … around the debt … with the lenders,” he said, after Zambian officials held talks with the IMF in Washington last week.
Zambia became Africa’s first coronavirus-era sovereign default in November and its ongoing debt restructuring has become a test case of Western multilateral efforts to make the debt of developing countries more transparent.
“No borrower wants default, so it’s better you negotiate your way through in a credible manner rather than defaulting,” Hichilema said.
The 59-year-old former CEO of an accounting firm won a landslide election victory last month, beating incumbent Edgar Lungu to take the helm of the country, which holds $14.3 billion in total external debt, a significant chunk of it to China .
Under the previous government, Zambia borrowed too much when times were good, then was unable to keep up with its payments when it suffered a recession caused by a fall in commodity prices, especially of its main export, copper.
The COVID-19 pandemic only worsened Zambia’s situation.
On Thursday, Hichilema said the days of profligate spending were over. He cited as examples the fact that he took a commercial flight to the United Nations general assembly last week instead of the private jet used by his predecessor, and that he had traveled with a lean delegation.